Westlake Chemical Partners LP Coming to Market

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Westlake Chemical Corporation is spinning off their ethylene production business into a new Master Limited Partnership.  Westlake Chemical Corporation is a vertically integrated manufacturer of chemicals, polymers and fabricated building products.  Interestingly the new MLP will have 3 production facilities and a ethylene pipeline–a welcome fact since some of the more recent MLP’s have had just 1 or 2 production facilities (such as Northern Tier Energy which has just 1 oil refinery) and this always put revenue at risk when 1 outage at a production facility can end your revenue stream.

Ethylene is produced from the ethane portion of natural gas liquids and Westlake believes that the feedstock for their production is a lower cost feedstock than global norms in the production of ethylene which use propane and butane for feedstocks.

Like almost every MLP that has been launched there is somewhat of a incestuous relationship that will be present after the IPO–in particular Westlake Chemical Partners LP will sell their ethelyne production to Westlake Chemical Corp. on a cost plus basis under a 12 year sales agreement for 95% of their production.  In this case Westlake Chemical Partners LP will receive cost plus 10 cents/lb. The claim is that this will produce more stable and predictable cash flow.


Westlake intends to make minimum quarterly distributions during the first year of 27.5 cents/unit per quarter representing a yield of 5.5% if the issue prices at the mid point ($20) of the IPO range of $19-$21/unit.

The issue will have a ticker of WLKP.  We might have an interest in this issue if it prices low ($19ish).

Continue Reading and most recent registration statement

Thanks to our longtime reader ‘Larry’ for pointing this new issue out to us.


Tim McPartland

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Tim McPartland
Tim McPartland is a private investor with over 45 years of investing experience. His analysis, research and writing is devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
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